How will the expiration of a landmark real estate agreement impact Canada's mortgage brokers?

A 10-year consent agreement signed by CREA and the federal Competition Bureau expired in late October

How will the expiration of a landmark real estate agreement impact Canada's mortgage brokers?

On October 24, 2010, the Canadian Real Estate Association and the federal Competition Bureau reached a highly publicized agreement that allowed the providers of non-traditional real estate services, like discount realtors offering a la carte offerings attached to flat fees, greater access to both the country’s MLS  platform and its real estate market as a whole.

The resulting consent agreement was lauded at the time for helping avoid a slew of potential cases around CREA’s limiting of access to the MLS and its negative impact on competition in real estate. But it was only put into effect for 10 years. Its recent expiration got MBN wondering about what, if any, potential impacts may be awaiting the country’s real estate consumers and mortgage professionals.

One company that has undoubtedly benefited from the consent decree has been PropertyGuys.com, now one of Canada’s most familiar private sale platforms. Walter Melanson, PropertyGuys’ co-founder and lead market analyst, doesn’t see the end of the consent agreement having an immediate impact on home buyers, primarily because they’ve become so accustomed to having more choice when it comes to requesting real estate services that they are unlikely to prefer a marketplace with fewer options.

“The rising tide of change in the industry is ongoing and will continue,” Melanson said. “Consumers who choose new alternatives are being rewarded for their choice. Every day, more and more real estate consumers get to experience their transactions differently than they could even 10 short years ago.”

It’s a sentiment shared by Mortgage Intelligence’s Chris Golding, who said the fresh ideas and new players that have entered the market over the past decade are responsible for buyers and sellers knowing they may be able to pay less for their real estate transactions while getting comparable value.

“I think 10 years of momentum and choice and knowledge are going to be tough to change,” he said.

Golding pointed out that mortgage brokers were once viewed in much the same way as the real estate providers who have entered the market in the wake of the consent agreement – as an innovative alternative.

“As time went on, we became more professional,” Golding said. “We were able to do things that nobody else could do. And eventually we were not the alternative anymore. We became the first choice.”

Like Melanson, Golding doesn’t anticipate the expiration of the consent agreement to have any immediate effects that mortgage brokers will need to worry about. If the status quo ushered in by the agreement remains intact, Golding expects one trend he has witnessed over the past 10 years to continue: an increasing number of private sales.

Private sales, which now account for approximately 15% of all real estate sales in Canada, present an excellent opportunity for brokers to model their advisor hats for clients, ensuring sellers charge a price lenders will see as legitimate and granting buyers access to their professional network. As an added perk, brokers can also encourage the sellers they are guiding through a transaction to recommend their services to the eventual buyer.

“I’m not just getting one opportunity in some cases, I’m getting a couple,” he said.

Melanson, a former mortgage broker himself, believes private sales are where brokers can really shine.

“Private sellers lean harder on mortgage brokers than those who are introduced to a broker by an agent,” he said. “In an agent-led transaction, the agent is at the centre of the deal, so the broker concentrates on their role, which is super transactional. In a private sale, the broker’s role is more relational and experiential—where the broker has a broader view of every other aspect of the deal.”

Mortgage brokers, he continued, “can really be a seller’s best ally, as they know how to navigate private sales as well, or better than, anyone else.”

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